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India might appear to be the last place on earth where you would find health care innovation. Although government programs have finally brought some infectious diseases under control, the nation's ability to meet the basic medical needs of its citizens remains abysmal. However, necessity spawns innovation. Despite the pressing demand and constrained supply, a few relatively new Indian hospitals have devised ways of providing world-class health care affordably--and to scale. The authors identified more than 40 hospitals in India with innovative strategies and selected nine that were consistently providing high-quality care at ultralow prices. To deliver on those dual commitments, the Indian exemplars developed three powerful organizational advantages: a hub-and-spoke configuration of assets, an innovative way of determining who should do what, and a focus on cost-effectiveness rather than just cost cutting. Those moves don't require changes in legislation; only a commitment to reverse the inexorable rise in costs. Indian hospitals, doctors, and administrators have traditionally looked to the West for advances in medical knowledge, but it's time the West looked to India for innovations in health care delivery.

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A new breed of multinationals from emerging markets is appearing in many industries. Western firms are wrong to underestimate, as they often do, the competitive threat from these firms. The discussion here highlights the non-traditional competitive advantages these firms use to win at home and abroad and shows how these firms use internationalization not only to exploit competitive advantage but to bolster it. The article concludes with suggestions for how Western managers should respond to the competitive threat from emerging market multinationals.

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